How to reduce hail damage costs

One way homeowners and insurers can reduce annual hail damage is to use impact-resistant asphalt shingle roofs instead of standard shingles, finds a new report.    

A new Institute for Catastrophic Loss Reduction benefit-cost analysis report shows annual hail damage in Canada has amounted to $400 million each year, on average, since 2013. To help reduce hail claims costs in the future, impact-resistant asphalt roof shingles — made of material that makes them resistant to hail damage — will save more than they cost in many places, including in hailstorm alleys.  

ICLR finds a 170 m² impact-resistant roof in Calgary adds $3,400 to the cost of a roof. But factoring in claims costs for hail damage, the benefits amount to $10,000 – a 3:1 benefit-cost ratio.  

Elsewhere, ICLR finds the benefit-cost ratio reaches 8:1. 

“The shingles are cost-effective wherever it hails almost once a year or more,” the report reads. “In Calgary, impact-resistant shingles reduce the chance of damage by 15 times. If the roof is damaged, average repair cost drops by half.” 

OSFI’s 2021 Q4 results show a stark loss ratio in hail insurance at 213.8% (Federally-regulated P&C insurers had $150 million in incurred hail damage claims last year, and $47.8 million net hail premiums earned.)  

This has only worsened since 2020 – OSFI’s Q4 results for hail in the previous year amounted to a 386.5% claims ratio, and in 2019, a 73.3% claims ratio, although OSFI’s figures are relevant to crop hail damage. 

In the face of rising loss ratios for hail insurance, ICLR says impact-resistant shingles will become more valuable and their need will increase, because climate change will worsen future hailstorms. 

Most Canadian roofs are covered with asphalt shingles (85% of single-family homes) and replacing an asphalt shingle roof on a 200 m² roof costs about CAD$5,000. 

While impact-resistant shingles cost between 2% and 9% more than non-impact-resistant shingles, the shingles pay for themselves in five years, on average (assuming the roof gets repaired every time it’s damaged), ICLR reports.  

But if damage does occur, impact-resistant asphalt shingles reduce the repair cost of damage by half, finds ICLR — from $2,400 on average to $1,200 for the average-sized roof. 

Since 2013, Canadian insurers have paid 26,000 hail claims totaling an average of $370 million annually in insured loss for personal property damage in hailstorms. Hailstorms “may be inevitable, but the economic catastrophe is not,” the report reads. 

ICLR says impact-resistant asphalt shingles make financial sense for insurers and homeowners, and roofs should be built beyond the code minimum by including impact-resistant shingles. “For an average-sized house in Calgary, benefit-cost analysis suggests that it can make financial sense for an insurer to pay to replace non-rated shingles with class-4 impact-resistant shingles,” the report concludes.